Image by Tom Raftery via FlickrProfit is as normal to corporations as breath is to people. The nature of businesses requires that they make profit, in their day to day existence. Humans breathe to live, but do not live for breath. Likewise companies make profits to exist.
They do not exist for profit, but rather to be citizens with rights and obligations, as well as being accountable to society.
Sustainable corporations are those that can make this accountability as easy as it is for fish to swim in water. Powerful corporations are recognisable by their impact on the society in which they operate.
Their ability to exist peacefully and profitably among communities can be a sign of balance between profit and people, therefore good governance.
This distinction in social accountability is what makes corporates relevant and powerful for a long time. Fish die out of water. Over the years business management literature has recognised this inseparable relationship between corporations and society.
It is now common to find terms such as corporate social responsibility, public responsibility, corporate social responsibilities, corporate social responsiveness, corporate social performance, corporate citizenship, business ethics, sustainable company, and triple bottom-line approach etc, sometimes used interchangeably.
All these concepts are an attempt to steer corporations into being accountable citizens to society and environment. Corporate citizenship and corporate social responsibility stand out as most common terms used interchangeably.
But are they one and the same thing?
The phrase corporate citizenship highlights the fact that that a corporate is a legal person, with status, rights and obligations like a human being. It is used to draw connection lines between business activity and the wider social accountability and service for mutual benefit. As good citizens, companies are expected to abide by laws and regulations. Companies pay taxes and respond to needs just as people.
Corporations are supposed to clean up after their emissions and industrial wastes. Any form of environmental challenge which arises from corporations, including deforestation and pollution, should be attended to in good corporate citizenship.
The concept of corporate social responsibility (CSR) was first made commercial and public by Howard Bowen in his 1953 publication, "Social Responsibilities of the Businessman."
However, the concern for (CSR) can be traced back to the 1930s. Chester Barnard's 1938 publication, "The Functions of the Executive," and Theodore Krep's, "Measurement of the Social Performance of Business," published in 1940 were two early references to the social responsibilities of executives and business.
These concerns arise from the reality that corporations have acquired huge authority, sometimes even more than states, over the years. Corporations influence political and socio-economic policies.
Growth and cumulative power of companies over the years raise fears over their responsibilities to societies. Hence the demand for corporate accountability is a not a public relations stunt, but a developmental concern.
CSR is therefore an all encompassing concept which reaches out to every possible area of influence in a company's activities. Whereas, the idea of citizenship, arises by the mere fact that a company exists and has a role to play within its jurisdiction.
However, the bottom line of both concepts is about corporate accountability to societies and stakeholders. Carroll, a renowned CSR authority, in one of his publications, described corporate social responsibility as involving the conduct of a business so that it is economically profitable, law-abiding, ethical and socially supportive.
He added that to be socially responsible meant that profitability and obedience to the law are foremost conditions when discussing the firm's ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent. The dynamics, in the role of the private sector and corporations in development, as well as the need for accountability, caused Carroll to later acknowledge the proliferation in the characterisation of CSR. It has become a widely contested concept.
Thus whether the term corporate social responsiveness, corporate social performance, business ethics or sustainable company etc, is used, all are an appeal to the moral conscience of businesses for the common good.
This demand for social responsibility is an acknowledgment that the corporate is powerful, and as stated earlier, sometimes even more powerful than states. This power needs to be monitored.
Power and politics go hand in hand. The increasing power of corporations, has gradually added politics to its core business. As the corporations exercise authority, policies are skewed in their favour.
The weakening role of states makes governments, an ineffective umpire, between corpo rations and the society. The result is that the two, people and corporations, are left to fight out for survival. Occupy Wall Street movement is a testimony of this development.
Keeping in mind that good governance is about aligning and balancing communal goals of stakeholders, CSR is a tool to realign, the goals of businesses, the state, people and the planet. A healthy state of governance is to ensure that the balance is attained and maintained. It is clear then that CSR has become more of a mandatory strategy than voluntary.
In Africa, this challenge is made even clearer, when viewed through the large scale of the continent's human and institutional capacity needs. As the continent remains a net exporter of capital through, natural and human resources, sustainable development will remain a dream, without meaningful CSR.
Many researchers concur that private sector has a critical role to play and are the best placed institutions to make a make significant positive contributions towards improving social, economic and environmental conditions in Africa.
It is therefore understandable that this role cannot be fulfilled through cosmetic and public relations gimmicks. Carroll's four categories of corporate responsibilities, namely; economic legal, ethical and discretionary, help to contextualise CSR, particularly as we consider developmental needs of Africa.
Economic responsibility, of companies is to be profitable and is the foundation upon which all others rest. Legal responsibility to observe and obey the law and play by the rules of the game is a second responsibility. The penultimate, ethical responsibility obligates corporations to do what is right, just and fair as well as to avoid harm.
In the fourth place is philanthropic responsibility, which is about being a good corporate citizen through contributing resources to communities and improving qualities of life. It is this fourth responsibility that tends to be overplayed as a CSR through public relations. Yet developmental needs in Africa demand that corporations play out in full the economic responsibilities through, provision of investment, creation of employment, and taxation.
African policy makers in their desperation to attract foreign direct investments, tend to give very long tax holidays to foreign investors. Foreign companies as part of philanthropic responsibility, the fourth level of CSR, then support community activities such as, sports etc, which are reported in their annual reports.
This oversight is the responsibility of policy makers and not corporations. So, while philanthropic responsibilities are good and commendable, the contradictions in national policies, societal and developmental needs, confuse corporations when coming up with relevant and sustainable social responsibility strategies.
This is one of the reasons why gaps between the rich and the poor, inconsistent policies. CSR can only be as effective and relevant as the extent of demand placed upon corporations. Stakeholders, especially policy makers have to acquaint themselves with the concept of CSR. Role clarity is critical for corporate accountability.
Governments need to come in as umpires between corporations and societies. CSR is no longer about volunteerism, but rather a necessary tool to redistribute wealth. This role of the government as an umpire in CSR should not be confused and relegated to traditional ideological conflicts between capitalism and socialism.
This is about contemporary win-win strategies. The cases of US and the Eurozone debts and financial crises, are demanding that respective governments play a more decisive role in levelling out wealth distribution. CSR is an instrument at the disposal of governments to enable corporations to play developmental roles.
Corporations on the other hand should not be content with just the public relations activities of CSR, but rather endeavour to rethink and reshape corporate internal management and governance, in accepting social responsibility, as a mandatory action to realign socio-economic goals of its stakeholders.
To be a good citizen is to realise that we are blessed to be a blessing to others. Being socially responsible is for corporations to be good stewards in distribution of those blessings.
To be in good governance, is for the state to oversee and ensure justice and fairness in distribution of blessings, within a transparent policy framework. A responsible society is one which is able to receive these blessings and plough them back into the society, through long, healthy and productive lifestyles, to enable national growth.